It does seem lengthy when you think about the procedures of liquidating a company. There are legal matters and processes involved, which is why hiring a liquidator is done in order to relieve you from the further stress that the affairs bring.
In our experience as being one of the firms handling business setup in Dubai, we have once conducted a business setup in Dubai Silicon Oasis and have liquidated a couple of companies as well. The Dubai Silicon Oasis company setup cost is quite manageable and the liquidation is as well. However, the procedures are quite lengthy if done by the business owners themselves.
Before we launch into explaining what the procedures are, let us define liquidation and find out its types to further be enlightened. You can visit this page to find out more about business setup and liquidation.
What is Liquidation
Liquidation is also known as “winding up”. In simple terms, this happens when the existence of a company has to end. This is when the company’s assets are sold in order to pay off debts.
Types of Liquidation
A liquidation can be a voluntary liquidation when the directors hold a meeting with the shareholders to let them know that the company is fit to run anymore. Creditors are called in for a meeting as well wherein they vote for a liquidator. In this meeting, the distribution of assets to creditors is discussed and agreed upon. This is believed to be a better option since you eradicate the risk of being accused falsely.
Involuntary liquidation is an order from the court telling the company that they need to be liquidated. The request for winding up is usually made by a creditor. It is believed that being brought to the court by creditors is riskier since there is a high chance of being wrongfully accused.
Procedures for Liquidation
The liquidation process may vary depending on the country. This is simply the general steps in winding up a company:
- To start the liquidation, the shareholders of the company or the court appoints a liquidator to take care of the procedure.
- The assigned liquidator takes care of selling the assets of the company. Creditors are paid through the sale that is made from the assets. They are paid in order of priority.
- If there are any remaining funds after distributing the sale of the assets to the creditors, these funds will be divided equally for the shareholders.
- After all the things above are done, formally dissolving the company is done.
As mentioned above, we take care of business setup in Dubai Silicon Oasis and in other free zones in the UAE. We ensure that Dubai Silicon Oasis company cost is reasonable. We have liquidated companies as well, and with this, we know by heart that liquidation needs to be done by a liquidator that you fully trust.